Correlation Between United Insurance and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both United Insurance and Novo Nordisk at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining United Insurance and Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance Holdings and Novo Nordisk AS, you can compare the effects of market volatilities on United Insurance and Novo Nordisk and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in United Insurance with a short position of Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and Novo Nordisk.
Diversification Opportunities for United Insurance and Novo Nordisk
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Novo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and Novo Nordisk AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novo Nordisk AS and United Insurance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on United Insurance Holdings are associated (or correlated) with Novo Nordisk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novo Nordisk AS has no effect on the direction of United Insurance i.e., United Insurance and Novo Nordisk go up and down completely randomly.
Pair Corralation between United Insurance and Novo Nordisk
Assuming the 90 days horizon United Insurance Holdings is expected to generate 0.83 times more return on investment than Novo Nordisk. However, United Insurance Holdings is 1.2 times less risky than Novo Nordisk. It trades about 0.08 of its potential returns per unit of risk. Novo Nordisk AS is currently generating about 0.04 per unit of risk. If you would invest 1,170 in United Insurance Holdings on November 28, 2024 and sell it today you would earn a total of 40.00 from holding United Insurance Holdings or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. Novo Nordisk AS
Performance |
| Timeline |
| United Insurance Holdings |
| Novo Nordisk AS |
United Insurance and Novo Nordisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and Novo Nordisk
The main advantage of trading using opposite United Insurance and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, Novo Nordisk can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Novo Nordisk will offset losses from the drop in Novo Nordisk's long position.| United Insurance vs. GigaMedia | United Insurance vs. FONIX MOBILE PLC | United Insurance vs. Entravision Communications | United Insurance vs. PLAYMATES TOYS |
| Novo Nordisk vs. Western Copper and | Novo Nordisk vs. ADRIATIC METALS LS 013355 | Novo Nordisk vs. Office Properties Income | Novo Nordisk vs. Ringmetall SE |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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